Debtors:30000. Bad debts:300, provision for bad debt 5% on debtors, discount on debtors 2%. Kindly pass All necessary journal entries with amount?

1.      Bad Debts A/c Dr                                                      300

                 To Sundry Debtors                                                                         300

(To Write off Bad Debts)

2.      Profit and Loss A/c Dr                                             1485

                 To Provision for Bad and Doubtful Debts                                 1485

(Provision @5% of Debtors after writing off Bad Debts)

 

3.      Profit and Loss A/c Dr.                                            565

                 To Provision for Discount on Debtors                                        565

(Provision @2% of Debtors after allowing Bad Debts and Provision for Bad Debts)

 

Profit and Loss account will be debited with:

1. Bad Debts:                                                  300

2.Provision for Bad and Doubtful debts: 1485

3.Provision for Discount on Debtors:        565

In the Balance Sheet

Debtors will appear as:(30000 less300 less1485 less565 =27650)

Firstly, Dr. Debtors Account          29,400

             Dr, Discount Allow (2%)      600

             Cr. Sales                              30,000

To recognised the Bad debt in SOI

Secondly. Dr. Bad Debt              300

                   Cr. Debtors Account  300 

For the provision: 

                   Dr. Bad Debt (5%)                                  1500

                   Cr. Allowance for doubtful debt (5%)  1500

 

It was a good question my dear. Hope i answer your question correctly  

I agree with Mr. Venkitaraman Krishna Moorthy. he narrated the answer with a clear views.

Agree with my friends answers

For Bad debts write off : Bad Debts A/c                              Dr                        300/-

                                        To Sundry Debtors                                                                    300/-

 

For the Provision for Bad Debts:

(Deduct bad debt from debtors to find new provision)

 

                                        P & L A/c                                Dr                              1485

                                    To Provision for Badebt                                                                    1485

                                      (30,000-300 *5%)

 

Provision for Discount on Debtors:

 

(Deduct bad debts, provision for bad debt from sundry debtors and make the provision for the good debts)

 

                               P&L A/c                               Dr                            564.30

                        To Provision for Discount on debtors                                            564.3

 

 

 

 

 

 

 

 

Bad Debts  300 (P&L)

   To Debtors (XYZ)  300 (Balance Sheet)

 

Provision (30,000-300*5%)

 

To Provision for Bad Debts1,485 (Profit & Loss)

      To Provision for Bad Debts1,485 (Balance Sheet)

 

Discount (30,*2%)

 

Discount allowed564.30 (P&L)

   To Debtors (XYZ)  564.30 (Balance Sheet)

 

 

BAD DEBT AC -DEBIT300

PRO FOR BAD DEBTS AC- CREDIT300

                                       Dr.     Cr, 

1) Provision for bad debts  1485

    to Debtors                              1485

 

2)  Discount Allowed            564.30

     To Debtors                            564.30

Bad debts A/c 300 To, Debtors A/c. 300 Discount on debtors A/c 594 To, Debtors A/c. 594 Bad debts A/c 1455 To, Provision for DD A/c 1455 TransferedtoP&L(Baddebts+DiscountonDebtors+Provision for Bad debts=300+594+1455=2349) Note: (29700×2/100=594 ,29106×5/100=1455

  

    DR CR Bad debt  PL Exp   Sundry debtors BL   

 

    DR CR         Bad debt  PL Exp   Provision for bad debt BL  

 

    DR CR Discount on debt PL Exp   Sundry debtors BL  

BAD DEB AC DR.300

 TO DEBTORS .300/-

2-PROFIT AND LOSS AC DR1485

    TO PROVISSION FOR DD    1485

3-DISCOUNT AC DR594

TO DEBTORS594